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Energy Performance of Buildings (Scotland) Regulations 2025 [Draft]
The next item is an evidence session on the draft Energy Performance of Buildings (Scotland) Regulations 2025. We are joined by Màiri McAllan MSP, the Cabinet Secretary for Housing. The cabinet secretary is accompanied by Scottish Government officials Ross Loveridge, head of the heat in buildings assessment and legislation alignment unit; Norman Macleod, a senior principal legal officer; Patrick Mason, the head of the heat in buildings assessment unit; and Jess Niven, interim deputy director of heat and buildings policy and regulations.
I welcome everyone to the meeting. There is no need for you to operate your microphones, and I remind everyone to switch their electronic devices to silent.
The instrument is laid under the affirmative procedure, which means that it cannot comes into force until the Parliament approves it. Following the evidence session, the committee will be invited to consider a motion to approve the instrument. I remind everyone that Scottish Government officials can speak in the evidence session under this agenda item but not in the debate that follows.
I invite the cabinet secretary to make a short opening statement.
Good morning. I am pleased to join the committee today to speak to the draft Energy Performance of Buildings (Scotland) Regulations 2025, which will legislate to reform energy performance certificates.
The EPC system has formed a long-standing part of Scotland’s property market since 2008 and of retained European Union law across the United Kingdom. However, the Scottish Government has heard concerns from stakeholders such as the Climate Change Committee and consumer groups such as Which? that EPCs need to change and be of higher quality. I want them to be accurate, up to date and relevant, and to give consumers the information that they need on the journey to net zero and warmer, more energy-efficient homes.
We have consulted extensively over the past four years on EPC reform. Users have been at the centre of that, helping to design a new EPC that I believe is now fit for purpose. I will be glad to share that design with the committee after our session.
The draft regulations that I have introduced do three things. First, they retain the well-established and well-understood parts of the existing EPC system, namely the existing trigger points for when an EPC is required, the standardised assessment that is carried out by suitably skilled and accredited assessors and a public register of certificates.
Secondly, they introduce the new reforms that we believe are necessary: a redesigned certificate that has been shaped by user feedback; new ratings and a new property report to ensure that consumers have clear information on current and potential fabric performance, heating systems and costs; a reduced validity period from 10 to five years to ensure that consumers have more up-to-date information; and strengthened quality assurance for EPC assessors to safeguard consumers.
Finally, they protect the property market during the transition. By introducing the regulations a year before they come into force and including a further one-year transition period, we are supporting the market to adjust to the new regime. That will be underpinned by a clear communications and engagement campaign. Consumers will also benefit from an interactive interface for a more dynamic EPC and through the heat and energy efficiency technical suitability assessment.
That is what today’s reform regulations will do, but I should be clear that they do not mandate property owners to meet an energy efficiency standard. We have consulted separately on those matters, but decisions have yet to be taken.
By introducing the reformed EPC and the new rating systems as a first step, we are providing a foundation for our wider heat in buildings programme, giving certainty to all sectors on how we will measure energy performance and any future standards that might be linked to that. My officials and I will be glad to discuss that with the committee.
I will open up the questions by asking about EPC metrics and the assessment methodology. When you joined us in a previous evidence-taking session, you talked about the UK Government’s home energy model. It would be good to understand how you are working with the UK Government on that, how that work is progressing and how any risk that might arise from a delay to it is being mitigated. The home energy model is a foundational part of the proposed changes.
The home energy model is a foundational part of the proposed changes. I will point to a few things in answering your question. First, UK and Scottish officials have been working closely from its inception through to where we are now. We have complemented that with interministerial engagement. Most recently, in summer, I wrote to my counterpart in the UK Government, seeking assurances that the home energy model would be developed in time to coincide with the regulations coming into force—as we are seeking—next October.
I have no reason to suspect that there will be a delay. UK ministers are also publicly committed to the timeline. To be absolutely sure about that timeline and to acknowledge how important it is for the development of this work, we have agreed a memorandum of understanding with the UK Government that, should any delay emerge at its end, it will give us early sight of that. We should be able to consider mitigations then, if need be. However, as I say, at this point, I have no reason to believe that there will be a delay.
What are those agreed timelines?
Ross Loveridge will keep me right on this. Is it to go live on the 31st October next year?
Yes. We are working to the same timetable, convener, because, as the cabinet secretary said, the UK Government is planning to make similar reforms in England and Wales. It is also because the EPC assessor market operates across the UK—it is covered by internal market legislation—and the two Governments need to co-ordinate so that assessors can continue to work across the UK as both Governments adopt the new home energy model as the basis for the new rating system. The UK Government has also consulted on changes to the ratings in a similar vein to what we have done.
The next theme is the reduction in EPC validity periods, which Meghan Gallacher will cover.
The Scottish Association of Landlords is in favour of retaining the 10-year period, arguing that increased regulation incurs costs, which can then be passed on to tenants. I am trying to gain more understanding as to why the Government has decided to reduce the validity period from 10 years to five years, and, in particular, what impact that might have on private landlords.
I will give my view on that, and then I will let my team come in with anything else that they would like to add. First, the whole thrust of our proposed changes is to empower consumers to understand more about the buildings that they are buying or renting. To do that, we need to have accurate and up-to-date information. There is a balance to be struck between ensuring that they have such information and understanding that, as you said, the frequency with which EPCs are required creates additional obligations for building owners. To our mind, the move from 10 to five years strikes that balance. Ultimately, we are asking that a property has only one more EPC in a decade, which, to me, feels like a proportionate way to ensure up-to-date and accurate information. When the committee heard evidence, bodies such as Which?, and others, were clear on that, too.
In both the social and private rented sectors, particularly when a landlord has a large portfolio, we are not just talking about them having to make one more certificate available. We have been considering how to work with the social rented sector on a framework for the procurement of EPCs for a large number of properties. We think that that could reduce costs by up to 20 per cent. The majority of PRS landlords have one property, but I am aware and conscious that some have more. We have been working with them on guidance for reusing data, for example, when updating an EPC.
I hope that, in all those ways, we can make what I think is a proportionate change all the less burdensome. I am also interested in and open minded to the idea that the validity period could move back to 10 years once a heat retention rating C has been achieved, but we will keep that under review.
That is helpful. Convener, I do not have any further questions on that.
It is interesting that the majority of people have one property, but others have more than that. Do you have the data on that?
Yes. In my scribbled handwritten notes it says that, in June 2024, 76 per cent of all registrations were for one property. I will check the source of that and come back to you.
That would be great—thank you very much.
The possibility of going back to a 10-year validity period once people reach an EPC C rating is interesting. The other point that I will make on the five-year period is that technology changes and we are getting better at many things that could enhance building fabric and so on.
The next topic is the quality of assessments, assurance and governance, which Evelyn Tweed will ask about.
Cabinet secretary, will you outline what the Government’s plans are for the training and availability of assessors to undertake the proposed new assessments? When we took evidence, there were some concerns about that.
09:45
My colleague Ross Loveridge has already mentioned that the assessment and the pool of assessors is a UK-wide matter, so it is another part of the process on which we are working closely with the UK Government to prepare for. The approved organisations that oversee the availability and the training standards have also been part of groups that officials have engaged with. Perhaps the officials can say a little bit more about that.
It is probably worth pointing out that the task for assessors is not materially different: it will still be a case of assessing and inputting data. Our approach to introducing the measure—the regulations will come into force one year from now, then there will be a further transitionary year—should allow for preparedness and readiness to be absolutely where they need to be.
I will come to Ross Loveridge, who can fill you in on what officials have been doing.
I am happy to do that. The market has been through previous changes—EPCs have been updated over time—so the assessor market is used to dealing with changes to the calculation methodology, the modelling and the software that is used. We have gained good experience during the past 15 or 16 years and we know that that is feasible.
On the capacity of the market, as the cabinet secretary said, we have had a good discussion with the approved organisations. We have around 3,200 registered assessors in Scotland. Having looked at the register data of certificates that have been lodged during the last year, we can see that around 1,300 of those assessors have been active, so it suggests that there is capacity in the market to cover any anticipated increase in the number of EPCs.
Back in 2008, from a standing start, we went from around 9,000 EPCs being issued to more than 200,000 being issued during the 2008 to 2009 period. When the system first came in, the changes were far greater than any of the changes that we are proposing now. As the market has been able to address those changes in the past, that gives us confidence that it should be able to do so again in future.
When might the training start, given that it is not too long before the regulations come into force?
I think that it has already started, to a great extent, has it not?
Yes, it has. We are already discussing that with organisations. Versions of the whole energy model are now available for approved organisations and assessor organisations to begin to interact with. We have published our first version of a “wrapper”—a complicated term that Patrick Mason can explain—so that they can understand the coding and the way in which the new home energy model will calculate the ratings for properties.
We are working with the UK Government on the roll-out of training on how to use the new systems. The register is being updated. It will use a new cloud-based tool that works with the home energy model and calculates ratings.
The time that we have built into the programme planning for that work means that the training will commence in the first part of next year—the winter period through to the spring period—which will allow time for the market to be ready.
That is the plan. I do not know whether Patrick wants to add anything to that.
As the cabinet secretary set out, the role of the assessor will not be significantly different. They will be doing much the same job, but they will need to be able to explain the results to the building owner, for example.
As we said, we are working closely with the UK Government, and are meeting one of the largest approved organisations next week to understand the changes that might need to be made to training.
Could you give us an indication of your plans for updating the auditing and assurance requirements?
Forgive me, convener, but I might turn straight to Ross Loveridge to answer that. We had a conversation about it this morning and he explained it to me very clearly, so it might be helpful for the committee to hear his explanation.
We have known for a long time—indeed, such matters were raised when the committee discussed EPCs back in January—that there have been long-standing concerns about the quality of EPCs.
In its various consultations and discussions with stakeholders and consumer bodies such as Which?, which the cabinet secretary mentioned, the Government has been explicit that the quality of EPCs needs to improve. The industry wants to do that; it recognises the need for improvement. Moving to the home energy model will help, because it is more accurate and so we should get more accurate ratings as a result.
When it comes to assessor skills and training, we have committed to, and have launched with the UK Government, a review of all the national occupational standards that specify what domestic assessors and non-domestic assessors must do to ensure that they are appropriately skilled and qualified. A wide-ranging consultation to improve and update those standards, which will in turn improve the quality of EPCs, is under way.
The second thing that we are doing in Scotland, which is quite distinctive, is aligning with changes to the EU directive that was the original basis for EPCs, to bring in a requirement for on-site auditing. At the moment, 2 per cent of EPCs are audited by using a desk-based system. We aim to improve that system through smart auditing, which will more accurately and automatically flag potential errors in the results that have been reported on certificates. The on-site audit will take a sample of the results: 2 per cent of certificates are currently subject to desk-based audit and 10 per cent of those will be subject to on-site audit, which will involve sending someone out to check that the certificate is indeed accurate. We think that that will drive up quality significantly. We are working with the Danish and Irish Governments on that approach.
Will you say a little more about smart auditing, Ross? That sounds interesting.
Patrick Mason can explain this as well. We have a system that flags errors. For example, if an assessor submitted or lodged multiple certificates—a number that seemed high relative to their capacity to undertake physical assessments on the ground—the system would automatically flag that up and we would then investigate. If a rating from a property changed rapidly and a new certificate was lodged quickly, we would want to investigate why the rating had changed and what was driving that change.
Patrick, would you like to add to that?
That is exactly right. In essence, our approach involves risk-based auditing. It looks at an unlikely set of circumstances, puts rules in place around it and then flags the relevant certificates for audit.
The other side of the auditing process involves the carrying out of local authorities’ enforcement obligations. Again, we are conscious of monitoring that. We are working on the extent to which local authorities are supported to understand their obligations and what is required of them. We are working with them on developing a toolkit to aid their understanding of their obligations as enforcement bodies and to help them to carry those out.
Alexander, you had questions in that area. Do you want to pursue those?
Yes, thank you, convener. Thank you, cabinet secretary, for that insight. As you have identified, the problem is that, under the existing regulations, some council areas’ approaches seem to be quite poor and they do not manage to achieve the required level of enforcement.
You indicated that you aim to have a toolkit for the new process. That is a step in the right direction, but what barriers to enforcement are there? Do they relate to workload or to assessment times? Will the toolkit enable you to give councils more opportunities to develop and expand their work so that they can look at the enforcement aspect? There is little point in having regulations that are not enforced effectively and efficiently. If councils are not managing to achieve that, it might mean that someone with a property in one area has to deal with enforcement but someone with a property in another does not. There needs to be much better balance and commonality, and there needs to be a process in place to ensure that that happens across the field.
I agree that we do not want disparity in how the regulations are observed or in the approaches that local authorities take. The changes that we are making now provide an opportune moment to pause and review how local authorities currently operate and to support them to get to the point of having a broad, shared understanding of their obligations and what they need to do.
That is mainly happening in two ways. First, we are considering, and seeking to draw upon, best practice in local authority areas across the UK that are managing the process well. Secondly, we are implementing the toolkit that I mentioned, which will ultimately provide authorities with guidance on how the obligations arise and how to discharge them.
We will move on to consumer awareness and implementation days.
Good morning, everyone. I want to ask how the Government plans to ensure that consumers will embrace the process. Perhaps you could also say a bit about the software interface that will be on offer to assist consumers. I have looked at the interface, and it seems a wee bit clunky and difficult to navigate. Could you talk about how we can get people on board with us and how we can make the interface simpler?
That is a really important part of getting the new system right, because the main reasons for change—other than that it will better reflect the actions that we want to see in properties in contemporary Scotland—are to make the system more readily understandable and navigable for consumers and to empower them by providing them with information. It has been important to us that the process should reflect how easily, or otherwise, users can interact with it.
Even the way in which we describe the ratings is becoming more intuitive. We now talk about “heat retention rating”, “heating systems rating” and “cost of energy rating”. All those terms have been developed in response to feedback from ordinary people who have tried to navigate the system. Those aspects ought to be intuitive. Likewise, the certificate itself has been designed so that it will be more navigable and understandable. All that is being done because we want to empower consumers.
I come back to two points. The first is the period during which the new system will be implemented, which we have chosen deliberately. It is a year until we start implementation, and then there will be a hybrid year in which both the old and the new systems can be worked. I stress our intention that the new system will be rolled out with a strong consumer engagement and communications plan. However, as I said, we should be starting from a better position, given that the new system has been designed to be more easily navigable.
I wonder whether Ross Loveridge might say a bit about the number of users with whom we have worked on developing the system. He could also address the interface point, because it is quite technical.
More than 400 people have responded to the three consultations that we conducted prior to laying the regulations.
On the user design work, about 85 individuals worked in depth and iteratively with researchers to look at certificates, understand the ratings and tell them, “This rating works best for me”, “This makes sense to me” or “This doesn’t make sense. Please change it.” For example, the language for the heat retention rating came from the fact that participants did not understand the term “fabric energy efficiency”—it did not mean anything to them. However, the concept of how well a building retains heat was clear to them.
Another idea that we had was to design a more interactive interface in which people can input real data about their energy tariffs, how many times a week they have a shower, or the temperature at which they like to keep their living room versus their bedroom. Because the home energy model is a more sophisticated system, it will allow us to have a user interface that can sit alongside the EPC. The EPC will still have to be a legal document that will need legal ratings, but the interactive tool will enable the public to ask, for example, “If I fitted a heat pump to this property, what would be the impact on its rating?” or “If I were to insulate this property in a different way, what would be the impact on my bills?”
Will the software that drives all of that just be launched, or will there be a period of testing and trialling it and so on?
The latter would be the intention. We are commissioning the next phase of work, which will involve a discovery project to work out how the technical interface would operate and how we would do the software development on the home energy model wrapper. That will involve further user testing. The software will not suddenly appear out of nowhere.
Are we seriously going to ask folk how many times a week they have a shower?
That is perhaps not the best example to have given, so I apologise if it was not appropriate to say it to the committee. However, that example has been mentioned in the conversations that we have had with people, because it reflects hot water demand in a property, which in turn impacts people’s bills. Depending on the size of the family concerned, some people will have higher levels of hot water demand than others, regardless of whether they choose to buy or rent that property.
No matter how much or how little information people want to provide, I emphasis that our approach is all about empowering them.
Many thanks.
10:00
On the point about empowering consumers, what are we hoping for? If we empower consumers, how will we see a change in the world around us?
If I were a prospective tenant, I would like to be able to assess how expensive my bills might be on the basis of the property’s heat retention rating. There is empowerment and the ability to choose on that side of things. Equally, the approach can help to drive behaviour change. I appreciate that the Government has a role to play in setting standards to accompany the foundation of the new EPC, but that is a discussion for another time—I will not open that up just now.
We started to touch on the fabric piece and changing the language around that. In the committee, we talk a lot about fabric first, but who knows what on earth that means? In relation to the EPC and the assessment, will there be more flexibility in what an assessor can look at? For example, I understand that there is a category for glass fibre insulation, but there is no flexibility around innovations such as hemp insulation, which is happening in Scotland and is very impressive. It would be fantastic to support that innovation, but it does not seem that assessors have the ability to acknowledge that that material is being used. There are all sorts of implications for really good things such as hemp, embodied carbon and carbon sequestration. I see Ross Loveridge nodding vigorously, which is good.
I will let Patrick Mason come in, because he is leading on that work.
We could certainly take into account the different types of insulation in different properties, which might not be well reflected at the moment, when we are developing the wrapper and doing more detailed methodology development next year.
That would be great, because I have heard about people who are trying to retrofit and want to do the best that they possibly can, but the materials are not recognised. It is great that you are taking that point on board.
I will move on with a question about the timetable for implementation. Cabinet secretary, in your opening statement, you talked about bringing forward the regulations a year before they come into force, to allow for a one-year transition period. I want to get a sense of whether that will give the assessor market and those in the property letting and conveyancing sectors time to prepare. Have you had that discussion with them?
That is right, convener—our proposal is that the regulations will go live on 31 October 2026. That would be the beginning of a one-year transition, when both types of certificate would be valid for both sales and rents.
I add that regulation 25 provides that if all reasonable endeavours have been made to achieve or obtain a new certificate but it has not been possible to do so, that will not get in the way of the property transaction. There is a little bit of flexibility there to reflect people’s reasonable endeavours.
To come back to Ross Loveridge’s point about the substantial peak between 2008 and 2009—I think that about 194,000 more EPCs were required—because of the transitional arrangements that we have put in place, we are expecting only around 56,500 per annum for the first two years. We have split the peak to make it more manageable. That is really important for consumers. I always have at the forefront of my mind how ordinary people who are just trying to go about their property transaction navigate all of this.
Equally, you are quite right that conveyancers and others who work in the property market need time as well. I think that the regulations provide that time for them, and we are engaged with them on that. Having done conveyancing, I know that conveyancers are completely on top of developments in the property market and are some of the best placed individuals to adapt to and to understand the changes. Nonetheless, we are taking our time to make sure that they have a transition period and that they are engaged on the changes.
Mark Griffin has our final round of questions.
Could you set out how the EPC reforms fit into the wider heat in buildings plans?
Yes, absolutely. Concisely, they are the foundation of the wider heat in buildings plans. The reform of the EPC has been lengthy and complicated work, and once it is done, it will be the basis on which we seek to drive different standards or legislate for changes.
The EPCs themselves are pretty neutral on all that. They will just reflect the situation as it stands, but they are an up-to-date, well-resourced and well-understood basis on which to do all that.
My next question takes us back to how responsive the new system can be to developing technology. Are the calculations behind EPCs still reliant on the standard assessment procedure, or is there an updated process behind them?
There is an updated process. I will swiftly hand over to the technical experts to speak to that.
Again, it is a good question. We have used the standard assessment procedure to calculate EPCs for a long time and the move to the home energy model will replace that. In a sense, the home energy model is the next iteration of SAP, but it is no longer called that and is a much more sophisticated model than the one we have been using until now. Patrick Mason always tells me this, but it can perform 1,000 calculations a month or something like that.
Yes, it uses half-hourly simulations of the building rather than monthly simulations, which means that it can take different modern technologies into account in a more sophisticated way, essentially.
One of the frustrations with the old SAP process was that it was fully reserved. At a time when emerging technologies were coming on to the market, installers who came to see me as constituents did not see it as a responsive system. Is the Scottish Government able to amend the calculations behind the EPC so that it is at the forefront of recognising the emerging technologies that are coming on to the market all the time?
That would largely be about our wrapper. Patrick, do you want to say a little bit about that?
In the same way that we share SAP with the UK Government at the moment, we would still share what is called the home energy model core, but we are building our own Scottish EPC wrapper that sits around the HEM core. That means that the Scottish Government can be more responsive to the changes that we need to make to the calculation for Scotland.
Finally, and briefly, I know that there has been a business and regulatory impact assessment of the process, but does the Government anticipate that the changes will have any impact on housing supply?
We are conscious that, whenever a change such as this one is made, it is seen as a fundamental change. However, I take a lot of comfort from the comparison with 2008-09, when there was a much more significant jump in the requirement to produce EPCs than what we expect now, and we have spread it over two years.
Again, reflecting on what I said earlier, I would say that the EPC is ultimately a neutral piece of work. We will have to watch much more closely to see how the regulated standards that come atop it change or impact the property market.
Thanks very much; that has been helpful. That concludes our questions from members.
We move on to agenda item 3, which is formal consideration of the motion. I remind those present that the debate can last up to 90 minutes, and I invite the minister to speak to and move motion S6M-19564.
Motion moved,
That the Local Government, Housing and Planning Committee recommends that the Energy Performance of Buildings (Scotland) Regulations 2025 [draft] be approved.—[Màiri McAllan]
Motion agreed to.
We will now produce our report on the draft regulations for the Parliament’s consideration. Is the committee content to delegate responsibility to me, as convener, to agree the report on behalf of the committee?
Members indicated agreement.
That concludes the consideration of the instrument. Cabinet secretary, I thank you and your officials for your evidence this morning. It was very constructive.
10:10 Meeting continued in private until 11:28.